March 2, 2021
How Would You Beat Retailers?
Welcome to our series, "How Would You Beat?" In each article, we pick a company and talk about how you could use jobs-to-be-done innovation methods to beat that company's product. We discuss innovation theory and explain the methods so you can put the theory into practice at your company.
In this article, we discuss how to beat retailers using Target as a case study. Target has no shortage of competitors in the retail industry, but it has done extremely well during COVID, pulling in $22 billion in revenue (up 21% in the past year) and holding a market cap of nearly $100 billion (up 65% in the past year). To get an insider's look at why Target is doing so well and the role jobs-to-be-done (JTBD) has played in its success, we sat down with our guest, Matt Bjornson. Director of Product Management at Target from 2016 to 2020, Matt is both a retail and jobs-to-be-done expert and he was responsible for turning around the registry group at Target. He knows how useful JTBD is for retailers, why retailers should be using JTBD innovation methods, and how retailers can use it to beat their competitors.
Digital vs In-Store Experience
To give a little more background on Matt and his jobs experience at Target, he told us, "I had long been interested in jobs-to-be-done theory. I've been in high-tech products for a long time and getting to know the writings of Clay Christensen who put forth the jobs theory was always something I wanted to do. When I became Product Director at Target over the registry experience, we had our jobs cut out for us, no pun intended. Target is one of the companies that most people think about when they're getting married or having a baby and they need all those things to support that new stage in their life. The business, overall, had kind of fallen on some pretty tough times. What was really interesting, from my perspective, about the opportunity, was that Target's business crossed not only the digital channels, but also the store and team member channels. The guests -- like the expecting mothers or the newly married couples -- would interact with our team members directly, as well as digitally. That was a huge area of interest for me."
Matt pointed out that when he joined Target, about 80% of their revenue was coming from the stores and 20% was coming from digital sources, and they were dealing with a long period of little to no growth. Now, three years later, there has been a tremendous shift to 60% digital and 40% in-store. Guest behavior has changed and the entire eCommerce and retail industries have shifted to being more online. How did that happen?
Using Jobs-to-be-Done Language
The jobs pertaining to marriage, wedding registries and having children -- many of the jobs Target helps people to solve -- are some of the most important jobs people will solve in their lifetimes. These types of jobs are also extremely functional and extremely emotional. It was this type of thinking, particularly around the emotional and social aspects of those jobs to be done, that Matt said presented the biggest opportunity for growth.
"There's also this dynamic around expecting mothers wanting to appear like they have the confidence to take care of their child. Obviously, a baby is something that you have to keep alive, to continue to grow and nourish, and that was a huge opportunity that we saw with jobs-to-be-done. Previously, we would surface some of these ideas as part of the research activities we were doing, but the key benefits of jobs-to-be-done were the mental models and having a consistent language to think about it in."
This JTBD language extends beyond product and design; it is also used by engineering teams, and even by HR during the hiring and firing processes. It helps you think about innovation in the context of speed and accuracy. According to Matt, implementing that consistent language encouraged the shift away from how previous product leaders had thought about the registry business.
"It's very different from traditional eCommerce where, you'd say, 'Hey, I'm going to target.com (or some other retailer) and I'm making a purchase.' If you know someone in your family is having a baby, you could empathize. What do they really need to help them be a good mother, or help a baby get to sleep at night? That context surrounding those jobs is very different from something like, 'I need to bring a present to a wedding shower.' Those are two completely different ways to think about the same business. And as we shifted our thinking around that, it was really pivotal in reinforcing how we organized the teams, how we thought about our quarterly planning, and how we thought about our key metrics."
This was a multi-year effort requiring a lot of work, but they managed to go from zero growth when Matt joined, to 25% top-line business growth in year three by changing the way they thought about the jobs their customers were trying to solve.
How to Approach the Competition
This growth is impressive and it raises some interesting questions about the competitive situation Target was facing, particularly with the registry business. Who were the competitors? What was Target's approach to taking market share from them before implementing jobs-to-be-done? How did the mindset change after implementing?
As Matt explains it, pre-JTBD, they were using the concept of a feature factory. "Competitor XYZ releases this feature and there's this mad frenzy. Stakeholders are like, 'Why don't we have that feature?' As part of the shift towards jobs, we really reinforced the jobs that we were trying to solve, like 'prepare to bring a baby home,' compared to 'build a registry.' The team thought of some interesting things that no one in the registry space was thinking about and it gave us a new way of approaching our business."
Although Matt's team was known as the "registry team", they were actually focused on those big life moments which, as Matt pointed out, in retail, is a huge opportunity. The "baby" demographic is a critical segment for retailers like Target, Amazon and Walmart because customer habits change. They try new retailers, looking for new ways to get what they need easier, faster and better. That's where the JTBD language came into play.
Matt continues, "A lot of shared language was used with stakeholders and even with the guests. Ultimately, we wanted to bring the guests' language back into those jobs so that, as we look at the job steps and how well we're doing, then we can objectively use their language to frame how the teams were thinking about and approaching opportunities."
Defining Customer Needs
One of the primary benefits of JTBD is that it helps you empathize with your customer. Truly empathizing with their struggle rather than just suggesting products to buy can help align your teams and focus on OKRs. All too often, companies lay out their OKRs without thinking about what to do about their customers' struggles. The OKRs are too internally focused on the company's success instead of the customers' success. If you can bridge those gaps by making the OKRs relevant to what your customers are struggling with, that's when the real success happens.
From a retailer's standpoint, if you could map out all the jobs to be done that a human goes through in their life, from having a baby and finding a job to receiving medical care and even planning a funeral, retailers have a huge opportunity. However, the way they actually think about it is, "Hey, we've got a baby and that's a new customer. How can we get that customer to be a customer for life?" Banks think this way as well. If you're in college, they're going to send you a ton of credit cards because if you set up your account with them, you're unlikely to switch your credit card. They're usually focused on their own products, not on the needs of the customer.
Target was able to attain the impressive 25% growth rate because they started focusing on the jobs their customers needed to get done. That level of growth changes your equity value, your market cap, and is the difference between being public or private. As Warren Buffett famously said, "Growth and value are tied at the hip."
Which Metrics Should You Track?
Which metrics was Target tracking on their way to 25% growth? Which metrics were leading and which were lagging? Which ones were the best indicators that their processes were successful? To help answer some of these questions, Matt tell us, "In general, retailers, like anyone else, are looking at the ultimate lagging metric: sales. I'm looking at how much was purchased off the registry on a weekly basis, and the categories that they purchased off of."
Matt goes on to explain that the registry on Target's website is actually very similar to eBay in that you have the ability to purchase almost anything you want. He uses the job executor and job beneficiary to illustrate his point. "We've got the executor of the job and that's the gift giver. They're the ones who are friends and family. You're having a baby and I'm going to your baby shower, or I'm helping you out with whatever helps a baby get to sleep at night. But you're the beneficiary and they have different functional, social and emotional jobs. As a beneficiary, you want to get things done, but how are you measuring progress?"
Will people still purchase off their registries things they don't need? How often are the customers visiting the registry and what items and item categories are they looking at? What types of gifts are they pairing? For example, maybe they're not only buying diapers, but also the creams and wipes. Or, if your job is to get your baby to sleep through the night, they might pair a swaddle with a couple of books for bedtime stories. You want to identify those additional items to see which stage of the job the customer is in.
On the gift giver side, Target wanted to figure out how to decrease the amount of time it takes them to put together the perfect gift and then use the gift receiver's reaction to that as a metric for whether the gift was good or not. Then you would want to track their experience as a parent, to find out if the registry actually succeeded in preparing them to have this baby. It's a completely different set of metrics than what you would normally look at in a purchase funnel. eCommerce platforms make it incredibly easy to measure user behavior, allowing you to track every single click to see if the customer ultimately makes the purchase. But all of this data can lead to very local optimizations. Businesses generally don't want to expend too many resources building something that they don't know for certain will succeed for fear of breaking the funnel. Instead, they AB test everything to death, not knowing if the choices were good until after they were launched.
That is the definition of a lagging metric. Because you're trying to measure after you launch, you want to decrease the cost of every launch, which leads you to these incredibly minute local optimizations that only can create growth if you have a ton of traffic to start with. If you're a new retailer and you don't have the audience of a company like Target, those local optimizations are going to get you nowhere. The question is, how do you get somebody to move from Amazon to your site in the first place? Your purchase funnel is not going to help you do that. The metrics of getting the job done can change your point of view and everything about how you operate as a retailer and eCommerce business, thereby helping to create much bigger growth margins.
If you're looking at the job of "get a baby to sleep through the night" from a registry perspective, that's where you can really help the gift receivers. The new parents (job beneficiaries) know that their goals is getting their baby to sleep through the night. The gift giver (job executor) can then give the new parents a gift to help the baby sleep through the night -- probably the best gift you can give any new parent.
Why JTBD Valuable Is So Valuable
Product managers, product directors or product executives out there might be wondering how to do JTBD and why it's valuable. We asked Matt about some of the most important things he learned about JTBD and what you should know about it if you're thinking of implementing it in your business. How to overcome some of the obstacles? Top 3 things to know about JTBD.
"I would say one of the first things every large organization talks about is how customer-focused they are. Jobs theory is really the best way to bring that to life because it's not just talking about the metrics piece of it. It's not just about the end result. You're really trying to tease apart why they're choosing Target. Why are they choosing Amazon? That "why" is the most important aspect of your sales. You can come up with personas or tool sets that you want to use, but until you understand why people fired you and some of the causal mechanisms behind that, you really don't understand your customer at all.
The other part of it is, who else am I really competing against? I'm not competing with Amazon or Walmart. Maybe it's something completely different that you don't even know about, so I think that's where a lot of potential innovation can come from.
As a product leader, you need to understand that this is going to take time, but the investment is worth it. You need to prioritize where to go first. I was fortunate I had a leader who supported my point of view. That obviously meant a lot, but that also allowed me and the team to go out and pursue this opportunity. But it took us time."
Matt concludes by saying, "I think the sweet spot is organizing teams around jobs. You can't go after everything, but those critical skills are the critical jobs that are so important and vital for your business. You deserve to invest in those if those are really priorities."
As Clay Christensen realized, companies need to organize around their customers' jobs. Organizing the company around what the company needs to do can lead to disaster. Just look at Kodak, Blackberry and Britannica.
We always like to hear experiences like Matt's, and we're happy to see Jobs Theory in action with product teams adopting JTBD and implementing it with such successful results like Matt and Target have had. If you'd like to share your own JTBD story, comment below or reach out to us today. To learn more about the JTBD framework, we have plenty of resources available on our site. Sign up for one of our free how-to guides and try our software for free.
Posted by Jay Haynes View all Posts by Jay Haynes